Wow! What an ironic post. I am currently having the same issue with my 66, 3 sp manual. My starter went out of commission and I purchased a mini starter from PA Performance, and sure enough, I was not able to get it to seat in the hole properly, the casting is too big, just like the previous poster and yourself.
My
trans is from a 67 Mustang 3 sp I found out recently, but the starter is the same for a 66 or 67, an 1881 model as it is known.
I contacted PA Performance, sent them pics showing the caliper measurements of the old starter and the one they sent me. The old starter was about maybe a 1/16 or maybe 1/8 smaller at the flange edge.
To PA Performances credit, they were right on the case. They took caliper measurements of the starter for the Automatic, the 1806 model, and sure enough, they have told me that the end casting for the 1806 starter will fit into the flywheel hole on my car. I took apart the starter and they are going to send me an end that has a smaller diameter to fit into the starter hole properly.
I am not sure where their castings are made, but obviously, this is a problem that is out there. I thought it was just my car, now we know, it isnt the car, it is the parts. Luckily, the vendor is doing the right thing and trying to make it right in my case.